Steel dumping claims tipped to increase

Steel importers are preparing for a rash of new anti-dumping measures to curb increasing volumes of cheap foreign steel, as the stoush over future anti-dumping policy comes to a head.

Following a Productivity Commission and government review of the system, Minister for Home Affairs
Brendan O’Connor
is due to hand down his recommendation to cabinet in February.

Importers fear that after a two-year hiatus during the reviews, steel makers will file a flood of new anti-dumping complaints.

The latest results from
BlueScope
and
OneSteel
show Australia’s steel makers are doing it tough. Steel prices are low and costs are high, while the strong Australian dollar is attracting cheap imports and has decimated the export industry.

The steel makers are desperate to increase local volumes and are eyeing a series of anti-dumping measures to keep imports out, most likely in galvanised coil, zincalume-type sheets, chequered plate, structural sections and steel tubes.

“We are expecting a rush of anti-dumping applications once the government’s review is over," said a spokesman for the Australian Steel Association, which represents importers and small distributors.

ASA argues that hundreds of small fabrication and distribution businesses miss out when the big steel makers use anti-dumping measures to keep out foreign steel, which is an intermediate product for many manufacturers.

But the steel makers counter that it is essential for the anti-dumping process to be streamlined to protect local producers, which supply the market in good times and bad. Cheap imports tend to surge when global demand for steel is low and then disappear once conditions improve.

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“We’ve got significant concerns about how much harder it is in Australia to establish dumping than it is in most other places in the world," said OneSteel chief executive
Geoff Plummer
.

Australian Customs takes the most narrow interpretation of the dumping tests as described by the World Trade Organisation, say the steel makers.

However, the WTO recently ruled in favour of China, which is one of the largest exporters of steel, in dispute with the European Union.

The ruling, released on December 3, found that EU anti-dumping duties on Chinese steel fasteners such as screws and bolts contravene WTO regulations.

Both sides are able to appeal against this ruling, but the win for China implies that steel makers must now treat China as a market economy when determining whether goods are being dumped below the domestic cost of manufacture.

Previously they have been able to argue that the domestic cost of production in China does not reflect the true cost because the country is a planned economy with subsidies for steel making.

The government will need to take account of the WTO’s stance on China, which has borne the brunt of many anti-dumping cases, when considering how to reform the Australian anti-dumping mechanism.

The initial Productivity Commission inquiry found the anti-dumping system benefited a small number of import competing firms but imposed greater costs on the rest of the economy. However, it noted that the net economic cost was small and that anti-dumping could be used to combat what can be seen as “unfair" trade practices. It advocated a public interest test, which ASA maintains would ensure that more fragmented industries, such as downstream processors, were not disadvantaged.

The Productivity Commission was largely sympathetic to importers, but ASA is concerned that the political power of the two big steel makers and other major manufacturers will swing the government towards more protectionist measures.

BlueScope and OneSteel both strongly opposed the introduction of a public interest test in their submissions to the review.

“We do not support the Productivity Commission’s recommendation for a so-called public interest test, because it will increase costs and introduce further delays for applicants, with no demonstrable public benefit given the already extensive investigative process undertaken by Customs," a BlueScope spokesman said.

Instead the steel makers are calling on the government to streamline the process, making it easier and less expensive to initiate anti-dumping claims, and to force the minister to make a decision within 30 days of a recommendation from Customs.

“We believe that reducing the period over which sustained injury needs to be proved [currently nominally 12 months], admitting evidence from cases in other comparable jurisdictions, and ensuring greater transparency of ABS import data, would also help to speed up investigations," the BlueScope spokesman said.

ASA is lobbying for a public interest clause to be inserted because it argues that the big steel makers are effectively monopoly players in their area of expertise – BlueScope in flat products like sheet and OneSteel in long products such as structural beams. By comparison the downstream fabricators, which turn commodity-grade steel into products suitable for manufacture, are a very disparate group, with many small players that cannot individually afford to take part in the anti-dumping system.